Aurinia Pharmaceuticals - Earnings Call - Q3 2020

Transcript

Speaker 0

Greetings and welcome to the Aurinia Pharmaceuticals Third Quarter twenty twenty Results. At this time, participants are in a listen only mode. A question and answer session will follow the formal presentation. Please note that this conference is being recorded. I will now turn the conference over to our host, Doctor.

Glenn Schulman, Head of IR. Thank you. You may begin.

Speaker 1

Thanks, Diego, and good afternoon, everyone. Welcome to Aurinia's third quarter twenty twenty, results conference call. Joining me on the call today from the Aurinia team are Mr. Peter Greenleaf, President and CEO mister Max Kalau, chief commercial officer mister Joe Miller, chief financial officer and doctor Neil Solomons, chief medical officer here at Aurinia. This afternoon, we issued our press release and associated financial statement package detailing the third quarter twenty twenty financial results, both of which are available on our website at www.iriniapharma.com and filed on a Form six ks with the SEC as well.

Before jumping into some brief remarks from the team, I'd like to remind everyone that today's call is being webcast live on Aurinia's Investor Relations website, and a replay of the call will be available approximately two hours after the completion of today's meeting. Please also note that the content of today's call is the property of Aurinia. It may not be recorded, reproduced, or transcribed without prior written consent obtained from Aurinia. For approval, please feel free to reach out to me, Glenn Schulman, via email at irurineapharma dot com. During the course of this call, we may make forward looking statements based upon our current expectations.

These forward looking statements are subject to a number of significant risks and uncertainties, and our actual results may differ materially. For a discussion of factors that could affect our future financial results and business, please refer to the disclosure in today's press release, our most recent filings with Canadian securities authorities and reports that we file on Form six ks with the U. S. Securities and Exchange Commission. Also, please note that all the statements made during today's call are current as of today, Tuesday, 11/10/2020, and are based upon information currently available to us.

Except as required by law, we assume no obligation to update any such statements as of this date. So as I said this afternoon, we'll have some brief remarks from the team, after which we'll host a Q and A session. So with all that, let me turn the call over Peter Greenleaf, Aurinia's President and CEO. Peter?

Speaker 2

Well, thanks, Glenn, and I want to thank you all for taking the time to join us this afternoon on our third quarter update call. So since taking the reins here at Aurinia about one years point ago, I couldn't be more impressed with how the Aurinia team has executed across all aspects of the company. While results aren't always what we set out to realize, I'm continually impressed by the professionalism, the dedication, and the focus of our team across the globe. I know it was just a week ago we had a call with you all to discuss our Audrey results, and we are here today to provide a broader update on our third quarter financial results as well as a review of where things are heading as we move into 2021. To be clear, as we've said before, we are squarely focused on voclosporin and its upcoming PDUFA date as a potentially first approved treatment for lupus nephritis.

As we reported today, we ended the third quarter with cash, cash equivalents and investments of approximately $421,000,000 to support our activities and are fully funded to execute on our launch plans for voclosporin following its approval. 2020 has definitely been an interesting year for all of us. But despite the broader challenges, we have been fortunate to secure the resources necessary to achieve the goals as well our goals as well as evolve the organization to meet the needs of our people of people suffering from lupus nephritis. Strong resources, a solid strategy, and great people to execute, combined with the potential of voclosporin, is what we need to succeed. And today, all of those pieces are in place.

Over the summer, we announced our NDA filing for voclosporin was accepted by the US Food and Drug Administration, granted priority review, and given a PDUFA action date of 01/22/2021. During the review period, we have had ongoing and collegial conversations with the agency. The review process appears to be on track. And as we've stated previously, we are not expecting to have an advisory committee meeting prior to the action date. At this point, we've completed the mid cycle review with the agency and are awaiting confirmation on our late cycle review meeting.

All work streams at this point are lined up and as expected heading into the PDUFA date in January. Looking beyond The U. S, we continue to advance our global regulatory and development strategy for voclosporin. In Europe, our interactions with the EMA continue, and our expectation is to file an MAA for voclosporin during the second quarter of next year. This timeline is in sync with our previous guidance and dovetails with our ongoing ex U.

S. Partnering conversations. As we head into 2021, we also plan to advance our interactions and look forward to providing additional updates and details on our timelines for Japan early next year. In addition to the regulatory process, we continue to work to differentiate the profile of voclosporin relative to older generation CNIs and other therapies that are currently in development for lupus nephritis. Voclosporin has always been strongly positioned given its characteristics as a new chemical entity.

Of course, we look to continue to build upon that. The drug's robust efficacy, rapidity of activity, overall safety and tolerability profile observed in both the AURA LV and the AURORA clinical trials, combined with the differentiating aspects observed in vitro, including lack of impact on glucose and lipids and even the potential for antiviral activity being evaluated through an investigator initiated trial, for COVID nineteen that was just recently communicated at a study in Leiden, The Netherlands. All of this supports our belief in this molecule and its differentiated applicability for patients. And, of course, should the FDA give us the approval, we look forward to the rapidity of for rapidly launching this drug in The U. S.

And markets around the world. So with that intro, I'll turn the mic over to Neil for a brief update on our ongoing pipeline activities, after which Max Galao will provide some additional insight into our commercial readiness. From there, Joe will detail our third quarter results, and then I'll come back on to close-up for Q and A. With that, let me turn it over to Doctor. Solomons.

Neil?

Speaker 3

Thanks, Peter, and good afternoon, everyone. Just a brief update from the clinical and regulatory world. My team has been working steadfast on their goal of continuing to differentiate voclosporin from other therapies and working to enhance the overall awareness of the broad dataset generated with voclosporin for lupus nephritis. Over the past weekend, voclosporin was detailed in two poster presentations during the twenty twenty American College of Rheumatology Annual Meeting. The first presentation details the previously announced drug drug interaction study, which showed that voclosporin had no impact on mycoclinolic acid or MPA, the active moiety of MMF.

Further, the pooled safety and efficacy data from the AURA LV and AURORA trials in LN, it was reported that voclosporin achieved significantly faster improvements in proteinuria. This is particularly important for people with lupus nephritis who are racing against time to achieve long term kidney health. As we say at Aurinia, time is nephrons. On the regulatory front, and as Peter mentioned, we have recently completed the mid cycle review of the voclosporin NDA with the FDA and continue our interactions as you head towards the late cycle review with the agency. All that said, the timelines are on track for our 01/22/2021 PDUFA date.

Looking beyond The US, we have commenced interactions with the EMA with a view to scientific discussions with the rapporteur and co rapporteur due to occur early next year. With these activities, we are on track to file the MAA in 2021. Lastly, I just wanted to take another moment to comment on the AUDREY dry eye program, which we reported results on last week. Once again, our sincerest thanks to all the patients and investigators who participated in the clinical research. Although the results were disappointing, the team continues to work on fully dissecting and understanding the results.

But as we announced last week, the VOS program remains suspended, and Auriga does not plan to conduct any additional clinical studies. With that brief overview, I'd like to pass it along to Max for an overview of voclosporin's commercial readiness. Max?

Speaker 4

Thanks, Neil, and good afternoon, everyone. I appreciate this opportunity to provide some additional detail on the progress we've made over the last quarter to prepare ourselves to realize the full potential this opportunity presents for patients, health care professionals, and the company. So first, let me highlight why we see this opportunity as so significant. Lupus nephritis is one of the most serious and life threatening complications of SLE. There are currently no FDA approved treatments for LN, and the current standard of care typically results in suboptimal long term health outcomes.

For example, seventy to eighty percent of people on the current standard of care treatment, these patients are typically women and in particularly women of color of childbearing age. They fail to achieve a complete response to therapy in one year. Furthermore, these patients still show signs of active kidney disease that can lead to kidney failure. However, in our pivotal AURORA and AURA studies, voclosporin has shown great promise as a potential treatment for lupus nephritis. Patients treated with voclosporin in combination with the standard of care have achieved statistically superior and faster renal response rates when compared to the standard of care alone.

These results were consistent across patient subgroups, including different races and ethnic backgrounds. As a company developing a pioneering therapy with such potential, we see ourselves as not only having a unique opportunity for people effective with lupus nephritis, but also an obligation to these patients as well. To that point, let me provide some insight on our preparedness for launch. I have no desire to come across as immodest, but I do feel it is fair to say we have now assembled a world class rare disease commercial team at Aurinia. This exceptional and dedicated group have their focus on highlighting the importance of early diagnosis and on improving long term health outcomes in LN.

As a result of this focus, we have already undertaken initiatives with payers and clinicians. And importantly, these activities have been undertaken in collaboration with some of the most widely published and recognized lupus key opinion leaders. Already, we have reached payers covering one hundred million lives. We've been highly encouraged to see that at each of our national and regional education programs, as many as 100 physicians have been in attendance virtually. As a result of these initiatives, we expect to reach the overwhelming majority of payers and more than a thousand MDs treating lupus and LN by the end of the year.

We are leveraging technology to the fullest so that our progress isn't delayed or undermined by the current pandemic. In fact, in all areas that are critical to successful commercialization, education, promotion, access, patient services. The entire commercial team is aligned for launch that aims for voclosporin to be quickly and widely adopted by the airline community. We are now ready to quickly launch and get voclosporin into the hands of patients if and when its approval is granted by the agency. That's quite a testament to the experience, talent, and commitment of my commercial team colleagues, particularly during the stressful times.

So I would like to conclude my portion of the call with a deeply sincere thank you to all of them for their inspiring commitment to making a tremendous contribution to the health of patients with LN. After approval and with the final label in hand, I look forward to providing you all with more specifics on the launch of voclosporin. I'll now pass it over to Joe for a recap of our financial results. Joe?

Speaker 5

Thanks, Max. On the financial front, Arena ended the 2020 with cash, cash equivalents and investments of $421,000,000 compared to $3.00 $6,000,000 at December 3139. Net cash used in operating activities was $30,300,000 for the third quarter ended 09/30/2020, compared to $11,800,000 for the third quarter ended September 3039. As we detailed in today's press release, we reported a consolidated net loss of $34,100,000 or $0.28 per common share for the third quarter ended 09/30/2020, as compared to a consolidated net loss of $19,000,000 or $0.21 per common share for the third quarter ended September 3039. The loss for the third quarter ended 09/30/2020, reflected a noncash decrease of $2,600,000 in the estimated fair value of derivative warrant liabilities compared to a noncash decrease of 4,500,000 in the estimated fair value of derivative warrant liabilities for the same period in 2019.

The derivative warrant liabilities will ultimately be eliminated on the exercise or forfeiture of the warrants and will not result in any cash outlay by the company. The outstanding warrants expire on 12/28/2021. The loss before the change in estimated fair value of derivative warrant liabilities and income taxes was $36,700,000 for the third quarter ended 09/30/2020, compared to $23,500,000 for the same period in 2019. R and D expenses decreased to $4,800,000 for the third quarter ended 09/30/2020, compared to $17,800,000 for the same period in 2019. The decrease is due to a decrease in activities related to clinical trials and exploratory development work, the capitalization of previously expensed inventory and the capitalization of internal development costs.

In accordance with IFRS, capitalization of inventory and internal development costs is appropriate when approval of the NDA is reasonably assured. Management believes that approval by the FDA of voclosporin as a treatment for LN was reasonably assured following the acceptance of the NDA by the FDA in the third quarter of this year. Noncash stock compensation expense charged to R and D increased to $814,000 for the third quarter ended 09/30/2020, compared to 596,000 for the same period in 2019. The increase in stock option compensation expense for the three months ended 09/30/2020, reflected higher stock option grants resulting from the hiring of new employees and an increase in the fair value of the stock options granted due to an increase in our share price. Corporate administration and business development expenses increased to $31,100,000 for the 2020 compared to $6,100,000 for the same period in 2019.

The increase reflects the investment incurred to build out our commercial and administrative organizations to support the launch of voclosporin as a treatment for RUN, subject to FDA regulatory approval being granted. Since the release of the positive results of our AURORA trial in December 2019, we have moved quickly to develop our commercial and administrative capabilities across the organization, including the expansion of our commercial team. Noncash compensation expense charged to corporate administration and business development increased $3,800,000 for the third quarter ended 09/30/2020, compared to $1,400,000 for the same period in 2019. The increase in stock option compensation expense for the three months ended 09/30/2020, reflected higher option grants resulting from the hiring of approximately 135 new employees and an increase in the fair value of the stock options granted due to an increase in our share price. With that review, I'll pass it back to Peter for some closing remarks.

Peter?

Speaker 2

Thanks, Joe. And with a strong balance sheet and cash and cash equivalents and investments of approximately $421,000,000 at the September, we're amply funded to support the launch of voclosporin. As I said before, strong resources, a strong strategy, and great people to execute combined with the potential of voclosporin is exactly what we need to succeed, and I believe that all those pieces are in place. So with that, operator, can you please open up to a Q and A session? Thank you, everyone.

Speaker 0

Thank you. At this time, we will conduct our question and answer

Speaker 1

you.

Speaker 0

Our first question comes from Ken Cacciatore with Cowen and Company. Please state your question. Mr. Cacciatore, line is open. Go ahead.

If you have yourself on mute, we can't hear you.

Speaker 1

Hello? Can you hear me?

Speaker 0

Yes. Go ahead. There

Speaker 1

you go. Yep. I was just wondering if you could comment on the review and interaction a little more detail around manufacturing if there's been an inspection on the site. And then wondering on the commercialization, just could you point to any examples of what you would say are really quality, orphan or specialty launches? Kind of any of the good learnings you can take from that, share from us what they've done right and what you're trying to emulate?

Thank you.

Speaker 2

Alright. Thanks, Ken. And I'll take the first one. And then to give Max a little preparation time, I'll let him take the commercialization one second, and I can hopefully build upon that. But on the manufacturing front, Ken, we can't really say the FDA doesn't necessarily notice us, notify us when they're doing the inspections, but, obviously, we know that, there are inspections ongoing, and we know there as of our most recent interaction with our reviewer that, that everything seems to be on target.

I can tell you that our preparedness for those inspections, whether they be Arrhenius specific facilities or our partners around the world, are, are right on target with where we want them to be. As we've said previously, you know, we partner with Lonza on our API manufacturing, one of the world's largest API manufacturers, and then, with Catalent here in The United States on our on our, encapsulation and and then through to to packaging. Again, one of the largest in the country, and and of the world for that matter. So we feel really confident in the fact that these facilities get reviewed very often and, and for different drugs reviewed, many, many times a year. So everything seems to be on target, and our preparedness is there.

Max, on the commercialization front, anything you would point to in terms of a a drug and or an analog to say what success looks like here? Sure. Sure. Thanks. Thanks for the question.

Speaker 4

Yeah. We've been, actively looking at analogs, in the specialty space, analogs that have launched in COVID nineteen. We've looked at Allen competitors, and we've also not just looking at, learning from what's worked, but also looking for underperforming. And so products that we looked at specifically, Specialty, ONPATTRO, Alcolyva, Cravista, underperforming, Rayaldi, Nuplizid, COVID nineteen, Nurtec, PADCEV, Ellen Competitors, and Libra, FENSARA, Nucala. So those are the kind of all the analogs we looked at.

And I would say some of the key learnings have been early and targeted investments, prioritized access and patient support. The from the underperforming, we saw the ineffective prelaunch payer engagement. We saw little commercial investment preapproval. Some of the COVID-19s, we learned that the company's rapidly pivoted to digital and accelerated DTC, that they pivoted to virtual engagement. And yeah.

So I I would say that we've taken all these learnings and incorporated into our launch plan. And and yeah. So that's that's what we've done. Hey, Ken.

Speaker 2

Thanks, Keith. Yeah. Thanks. Thanks, Ken, and and thanks, Max. The only thing I would add is, obviously, the one thing we know is we have to have metrics and measurement as we go into the launch, obviously, and we have to have a solid launch strategy and the right people.

But we know we have to beat expectations. And if one thing the market is good about marking a successful launch is is the drugs that that beat expectation. And, you know, recent, you know, if you look at Tbiza over at at the Horizon, yeah, I think they've just job at launching that product. So we're trying to look at those who've really not only, done the right thing for the drug and patients and getting it in the hands of docs and patients, but also, what market expectations are gonna be. And we're making sure that we metric and measure ourselves against all of the above.

Speaker 1

Great. Very helpful. Thank you.

Speaker 0

Our next question comes from Alicia Young with Cantor Fitzgerald. Please state your question.

Speaker 6

Hey, guys. Thanks for taking my questions and congrats on the progress. A couple. Just one most of them are kinda high level, though. But one is just I I know you guys are probably in the field doing checks.

But can you just talk about how, like, patients in lupus nephritis community have been responding to COVID nineteen? Are they going to the doc less frequently, etcetera, etcetera? I guess the reason I asked is just because it feels like, you know, you may be launching when we're still dealing with COVID. So I just wanted to try to see if you had a grasp on, like, what those patterns look like currently. And then the next question is is, you know, I get this question a lot from people.

You know? And I know you don't you won't give up everything here, but, you know, people ask, well, hey. There's all these other bigger companies like EU Pharma that may be having assets, you know, in the space. You know, how how can a company like yours compete? Is it by, you know, contracting or payers, or is it just, you know, kinda just a much better strategy?

If you could give some, you know, high level color to give people some comfort, I think that would be helpful as well.

Speaker 2

Why don't I thanks, Alethia. And let let me maybe start with the second one first, and then I'll ask Neil and and and Max to come with with what we may be gleaning from some field market research, what we're hearing from physicians about patient visits, etcetera. Obviously, we have field troops on the ground now and medical affairs team that's out there talking to physicians every day, so we hopefully can give you some directional color there. Obviously, we have, you know, a near term competitor that's a large pharmaceutical company, and and no company of our size is gonna be able to throw the same amount of dollar resources at, you know, at a a problem and or an opportunity than a large company with very deep pockets. But I can tell you that most of us come from, have been trained by, and have launched successful drugs in the environments of both small and large companies.

And the characteristics of successful launches aren't just deep pockets. I mean, it's good strategy. It's the people who know what It's having a field team that is motivated and passionate about what they wanna do and what they wanna drive and and a solid strategy along both of those. And last, and and, obviously, the most important is having the right drug and having a drug that has an efficacy profile and one that impacts patients in a way that provides those very talented and experienced people with the tools that they need in order to go in and do what they know what they know how to do from the learnings that they've built over years.

And, you know, we've echoed a lot the experience of our people and the talent that we brought into the company, and I think that's probably because we, passionately believe that people are the quotient that's gonna make the difference here alongside of our strategy in this this great drug. So we think we can compete, and we know we've got the the market research to support early, you know, premarket what we think, we can do with this drug and the profile of this drug. So we feel very confident about our our prospects here. I'd say the second one is we we have significant resources. And while I know, it's not always the most popular thing in the world to be raising money and ensuring that you have, the right level of investment capital going into a launch, I think where many companies end up falling short is coming in with a low expectation as to whether the company will ever ever have to launch the drug, and they underinvest.

And not that underinvestment is always a decision made to extend runway. Sometimes it's just a decision made of having a lack of capital of which we do not have now so we can make those right investment decisions. So we feel very confident about our commercial prospects here. We only have one near term, potentially approved, competitor directly in LN. In the future, that could change, but we've got a couple of years where we can really make a strong dent.

The second question about how patients are responding, visits, etcetera. Why don't I first start with maybe what Neil might be seeing, you know, through our ops team that's out there in the field on the medical side and then see if, maybe Max has anything to add to that. Doctor.

Speaker 3

Yeah. Thanks, Peter. I mean, so our experience on the clinical side is limited to the follow-up visits from our AURORA two study. But obviously, we have a number of US sites and a number of patients in The US. And certainly what we found, you know, is aside from probably a couple of months back in March or April where some of the visits were being delayed, you know, these lupus nephritis patients have organ threatening disease.

And, you know, we find they're getting their tests. They're getting their urinalysis. They're getting their blood tests, you know, and they're often seen in different parts of the hospital. So, you know, certainly the experience in the clinical trial setting has been relatively normal. There's been no problems with access of our clinical trial monitors to the sites.

Also on the medical affairs side as well, although more challenging, they're a very resourceful bunch and they've managed to really maintain and build up a very, very high level of contact with the lupus prescribers. But, I think it's probably best if I hand over to Max to add a bit of color to what I've said. Max?

Speaker 4

Yeah. Thanks. And thanks for the question. And yeah, we've been following this closely both in terms of just kind of the general market trends and also through our field intelligence. And, you know, there has been there clearly has been a decline in specialty patient visits, you know, prior but prior to this resurgence of COVID, though, the the patient visits were about ninety seven percent of of baseline, you know, about a month ago.

So the pay the visits are were coming back even though about 20% of them were were virtual. The the and and that is consistent with what we've been hearing for from nephrologists and rheumatologists in terms of their lupus and and and LN patients. But the follow-up is happening. Some of it is happening virtually. It may may maybe maybe a little less than what it's been in the past.

We remain confident and encouraged by what we're seeing in terms of the patient visits and and that the opportunity is successful.

Speaker 6

Great. Thank you.

Speaker 0

Thank you. Our next question comes from Joseph Schwartz with Please state your question.

Speaker 7

Hi. Thanks for taking my question. So I was just thinking back to the fairly rapid pace of AURORA trial enrollment despite fairly constrained patient enrollment criteria, or at least you were certainly more careful after AURORA, and it seems you were very selective. So if we were to think about or I was wondering if you give us some insight into the team that executed that trial with fairly selective enrollment. How you think about the label, how it will compare to the enrollment criteria in terms of whether it's broader, I would think broader.

And then obviously, the current environment is challenging. And then lastly, you're going to have a team of sales and MSL people that are executing launch. Can you help us think about the different levers there? And how we should think about in terms of order of magnitude, the pace of launch relative to the pace of AURORA trial enrollment?

Speaker 2

Yeah. Let me why don't I start and then ask Neil to build upon maybe what I'll say? I would say one it's I think it's one thing to talk about the difficulty of, enrolling, clinical trials, in both competitive environment and environment where, you know, you're trying to find patients globally and compare that to, necessarily what the market opportunity might be. Our trials, when we look at, both the phase two and the phase three that we did, give us access to a very large percentage of those patients with active lupus nephritis, upwards of, we believe upwards of north of eighty percent of those patients. We'll have to see where the label comes out, obviously, but our trial criteria gives us that open access point.

So we don't see the difficulty of of trials being a direct correlation to potentially how the acid then reacts and or what you see in terms of prescription uptake. And we can track that through, you know, ICD nine codes and what patients are out there, what we know from the patients who are actively suffering from the disease. So I think the two are are separate and distinct, but but let me, you know, not answer that question fully. Let me also ask Neil to build on that with me.

Speaker 3

Yeah. So, I mean, thanks, Joe, for for the question. You know, you you said one thing that that's not quite true or at least perhaps I'd just like to build on. You were talking about those restrictions that we put on compared to maybe the first chart. A lot of those restrictions were kind of qualitative rather than hard fast rules in the protocol.

The protocols are actually very similar. It was more we learned a lot about the drug between the two studies and we learned about the kind of patients and comorbidities that may result in perhaps a more difficult outcome in certain countries. You know, if you look at the actual entry inclusionexclusion criteria, they were very, very similar and of course they parlay into the label as we move forward. And of course, when the drug's actually launched we will have learned even more about the drug. So would just say that in some ways I would counter that and say actually we had a very, very broad bunch of entry criteria, which encompass most of the patients that require treatment with lupus nephritis, you know, in the doctor's clinic, albeit in a kind of prescribed way in the protocol.

Speaker 2

Maybe on the second part of your question, Joe, I can ask Max Gallaudet join me here and, you know, give his thoughts on an early uptake. What are the key drivers of that for us? And, I'll see if I can add anything to that. Max?

Speaker 4

Sure. Thanks. Thanks, Peter. Thanks for the questions. Yeah.

So as I mentioned, think it we're, you know, we're encouraged that the patient opportunity is accessible. At the same time, you know, we're we're still we're heading into a time where, you know, COVID infections are increasing. And as COVID increases, access to the actual physicians becomes more challenging geographically. So I I would say, you know, that that's gonna be a determinant to our early uptake. It's just the the extent of access to to physicians.

But, again, the we're we're we continue to be very encouraged in terms of what we hear from physicians, what we've heard in market research, what we've heard about our value proposition. And so I would, you know, I would now you suppose my guidance would be to, you know, to be to be similar to other therapies that we're launching during COVID times.

Speaker 2

And the last thing I would add to that is I think the biggest driver, Joe, for us is gonna be, one, the label and when we get it. And then we gotta have motivated people that wanna go out and drive this, and we think we've got that. I mean, Salesforce is still the number one conduit and to physicians and and aiding them to understand the approval of a drug, the dosing administration of the drug, the data on a drug. And, we've got a a highly motivated and passionate group of people who are gonna go out and drive that. If we had underfunded there, that would be a major concern of mine.

Access is still gonna be an issue to Max's point, but at the end of the day, we have other tactics to try to, support that, whether they be online tactics. And and, you know, we said in previous calls that we purposely went out and hired a Salesforce team that's highly tenured. And not only highly tenured, but highly tenured in rare disease and with significant experience in the areas in nephrology and rheumatology so that if they need access, most of these people, if not all of these people, know the people they're calling on. There won't be people introducing themselves for the first time. Sorry.

I got a follow on question there too, Joe, so let me, let let me let you ask that.

Speaker 7

Oh, yeah. Thank you so much. It's really helpful context. So I was just wondering, you know, who are the most likely patients to, you know, need the drug or be early adopters at the outset? Is it patients in a flare?

And, you know, if if so, like, you know, how often does that happen? How are you helping centers visualize, you know, which patients to to wanna provide the drug for first?

Speaker 2

Yeah. I I think I'll start and then ask Max to catch anything I missed. But we're gonna set a very aspirational target in what we ask for dependent, of course, upon approval and and what the label allows us and the lay the sort of degrees of freedom we have that the label provides us to to ask for those patients. But we studied this drug in addition to the standard of care, and we ran it directly against the standard of care. So and up up to eighty percent of patients with active lupus nephritis have ability, at least from the studies that we've done, to get access to this drug.

So, you know, we're gonna go in and challenge the standard of care. We're gonna try to support, you know, good diagnosis, good patient education to drive more patients in, to create higher awareness, and increase, the total diagnosis pool of patients that might be getting an inadequate response to their to their current meds. So I think we have a pretty pretty wide open field in what we can ask for, and we have tactics to support, you know, trying to gain even broader access to that all dependent, of course, upon, you know, the label that we see and the hopeful approval we see come our PDUFA date in January. Max, anything I'm missing on there?

Speaker 4

No. I I think you hit the nail on the head. We see ourselves as a physician to reset the standard of care with voclosporin. And and as Peter said, we compared ourselves to the standard of care in our pivotal three trial, and and and those are the types of patients that we will go after right from the outset.

Speaker 7

That's really helpful. Thank you.

Speaker 2

Thanks, Jim.

Speaker 0

Our next question comes from Maury Raycroft with Jefferies. Please state your question.

Speaker 1

Hi, everyone. Congrats on the updates, and thanks for taking my questions. So you conducted the drug drug interaction analysis with MMF, and then the analysis showing how drug monitoring is not needed when on voclosporin. So just wondering if you think these data will go into the label? And can you contextualize these data competitively and maybe talk about how important the findings are to payers, doctors, and patients?

Speaker 2

Neil should comment, on the DDI study and and, the particulars around that. I guess the one thing I can say is competitively, this sets us up quite well. You know, listen. If anybody, you know, wanted to compare us and why we might be in a different, you know, mechanism might act not mechanism, but a different, compound here, this is one of the main drivers of that difference. The fact that you can flatten dose this product is, incredibly important, in terms of its competitive profile, And we've done market research with, physicians, and that obviously is one is one key area they see and one they, they find highly favorable.

Neil, on the study itself and what our thoughts are around the label, you know, give your directional answer to that.

Speaker 3

Yeah. I mean, so the drug drug interaction trial, you know, in terms of getting a label, I think, you know, what we won't have is we won't have a comment saying that there's interaction with MPA. Now, of course, cyclosporine does have an interaction with MPA. It reduces the AUC quite significantly, the exposure and hence the efficacy of MMF, and we're not gonna have that. This was, you know, done in lupus patients.

It was a formal drug drug interaction study, precisely to disprove the thesis that voxaparin was similar to cyclosporine. It's not, and it behaves differently on MMF. In terms of the therapeutic drug monitoring or lack of requirement for that, again, that supports our dosing. Our dosing is that we start with flat dose and adjust according to GFR and of course there's intellectual property around that as well. In terms of commercial differentiation, that's pretty unique because not many drugs that do that.

And of course, the other drugs in the class require trough levels, therapeutic drug monitoring to even try to get to the right target, you know, which has not actually been determined. So that's for the kind of competitive advantage for voclosporin.

Speaker 1

Got it. And I'm guessing doctors definitely appreciate these points. Can can you talk about the payer perspective on some of these points?

Speaker 2

Yeah. I think, you know, to some degree, payers are gonna take the base data, and they're gonna take lead from the thought leader physicians and medical directors that sit within the plans. And all the research that we've done up to this point is pointing quite positive to that. I mean, data speaks for itself. And then, when other scenarios of step throughs and other things are put in front of them, we feel very, very good about what our profile looks like going into a potential launch.

Payers obviously, look first at the data and, then look to get advice from their physicians that that that advise them both directly and indirectly. And everything we've done so far, Maury, in terms of our market research with both payers, physicians, and patients has pointed to, you know, a good payer profile in terms of, what the data actually shows. And we gotta go through those, strokes once we have an FDA approval, and we price the drug, and, you know, we have those actual conversations, but feel very, very comfortable that Max and his team are out there having those preliminary conversations in terms of education through our medical science liaisons on the data itself. So I think we're right on target with where we need to be, and I can tell you things look, quite favorable. I would tell you I've launched other drugs in the past that that didn't have as much of an open window, so we feel really good about it.

Speaker 1

Got it. Okay. Thanks for taking my questions. Thanks,

Speaker 3

Warren.

Speaker 0

Our next question comes from Justin Kim with Oppenheimer and Company. Please state your question.

Speaker 8

Hello. Good evening. Thanks for taking the questions. Just curious, have you had any conversations with KOLs on whether you expect the LN population being earlier or later candidates for a potential COVID nineteen vaccine and whether you foresee any special considerations on vaccines implemented over the course of voclosporin treatment.

Speaker 2

That's a thanks, Justin. That's a great question. I actually do not have an answer to it because we have not I have not pulsed any docs on this. So I would turn to Neil who may be hearing more of this through, follow on work with our sites, but I don't have an answer to you, on that one as I wouldn't probably for any other drugs, including drugs that I or my children might be on. I don't know that any guidance has been put out there, you know, nationally or or globally.

And specific to the LN population, I can't comment. Neil, do you know

Speaker 3

if Not you heard specifically. In very general terms, it was a conversation we had earlier that these are obviously higher risk patients because of their condition and because of their immunological kind of disordered immune system, so to speak. So I would imagine, they would be higher on higher up the ladder. But, other than that, I I I don't know anything. I don't know, Max, whether you have any experience to these discussions.

Speaker 4

Yeah. Hi, Neil. No. Would not have any, perspective on those discussions at this point.

Speaker 8

Okay. Got it. Just curious. And then, you know, Doctor. Rovan provided a a really interesting take at at ASN on how he sees the treatment landscape changing in LN.

With regards to potentially reaching patients sort of beyond the EGFR status, included in AURORA, can you just discuss how you see that, potentially broadening over time and what types of clinical evidence or or physician experience may support that expansion?

Speaker 2

You know, I'm gonna weigh heavy on you on this one since I not that I have one, I haven't seen the presentation. And number two, you might have more of a directional answer or idea where where doctor Rovan was going with that.

Speaker 3

Yeah. I mean, so it's actually a really good question. You know, we kind of assessed a cutoff of eGFR, which we we kept over two studies at 45. And most of the patients with the worst GFR are those that are really not doing very well and may actually not be suitable for C and I therapy anyway. Regardless, we were in or getting into label discussions with the agency and we don't know how they're going to pan out and what the recommendation is going be on the label.

But certainly it's a consideration because there are some patients in our study, you know, as you can imagine, their GFRs fluctuate wildly, whose whose GFRs at least in prices steroid pulse were actually reasonably low and did pretty well. So so, you know, I think GFR as function of disease severity, you know, may not be ultimately for a few years down the line absolute contraindications, this class of drugs. You know, where that comes from physician experience, you know, or any phase four clinical trials that we decide to do, we're not sure yet. This is something that we have to, take on board when we see how the label goes and how the drug is received in the community.

Speaker 8

Okay. Got it. Just maybe a final housekeeping, sort of question. You know, noticing that the the G and A prep has sort of, been recognized on the P and L. Can you maybe discuss on a personnel level and and and sort of as an organization how much growth we can expect, sort of into four q and and and maybe, you know, whether that caps out going into 2021 or or or whether there would be a little bit more growth there as well?

Thanks.

Speaker 2

Yeah. I obviously, we haven't given any, revenue and or expense guidance. So, let me try to directionally give you an answer. Maybe you get you can try to model it out from there. But listen.

We we've hired the majority, of of the people that we need to, and, obviously, people are the majority of our costs as we end into the last quarter and into this quarter. So as you see those numbers, I think, you know, a steady state around modeling sort of the people based numbers there is probably not a bad idea. Obviously, marketing costs and elements of sales costs are going to go up over time. Obviously, our costs, at least as it pertains to voclosporin investment in the pipeline, are gonna go down, over time, because of the recent, announcement around dry eye. We hope to just find a way to fulfill that soon with a diversified pipeline.

But as for now, that's the way I would model it. But I think if you were to look at this quarter and into next quarter, it'll give you a good idea of what our expense base is. And then if you work around sales and marketing costs around averages and successful launches, you'll probably get there, Justin. But, as I said, we haven't really given guidance on it, especially quarterly guidance. So, but but thank you for the question.

Speaker 8

Understood. Thanks so much. I'll hop

Speaker 2

back in the queue. Thanks.

Speaker 0

Thank you. Our next question comes from Ed Arce with H. C. Wainwright. Please state your question.

Speaker 9

Hi, everyone. Congrats on the continued progress and thanks for taking my questions. I have three. One, regulatory and two, commercial. So first one is, you, had mentioned in your prepared remarks that you're preparing for a light excuse me, a late cycle review, with the agency coming up.

Can you tell us when that is, and and what specific aspects do you expect to, to be discussed, at that meeting?

Speaker 2

Yeah. I would say the, late cycle review is on on normal course. You know, when we said we're waiting, if you just sort of map out when these things are expected to hit, we're right on track with what the review cycle should be. So I wouldn't read into whether that's ahead of schedule or or behind. It's it's right on the money as to when these things should come through.

Neil, you wanna try to take a swing? It can be so varied as to the the areas that that are covered, in any, one of those late cycle reviews. But, Neil, you wanna if you've been closer to the day to day conversations, maybe take a swing at that?

Speaker 3

Yeah. Sure. I mean, it's a statutory meeting, Ed. So, yeah, obviously, we we knew we were gonna have it, and and we knew the pro we know the approximate date as well. What it does is it ties up it gives the the agency a further kind of opportunity to to tie up their review to address any questions or or see what they what else they need from us so that they can complete their review.

It is part of the open dialogue that we have, but it's kind of more more formalized. We, you know, we get we get we actually written guidance about what what what we're required to provide them, and it's done usually in a timely manner. But, you know, the the it really is, I guess, the the last, odds and ends, just to review before the, labor negotiations really, you know, start intensifying.

Speaker 9

Okay. Great. Fair enough. So turning to commercial. As you noted in your release, you're, working on being fully prepared for the potential launch, by year end.

Given that the PDUFA date is only three weeks after that. Just wondering, you know, what specifically does that entail, between now and and year end? What what is left really to do, or or is it just kind of, wrapping things up that have, I would imagine most everything is already well underway? I'm just wondering specifically what is still left to do and and get in place by the end of the year?

Speaker 2

It's a it's a good question. And without going into the absolute specifics, I I if I were on the call on the other side listening and the company said, we'll be ready to launch this thing on the PDUFA date, my natural question would be, well, what if it what if you have an early, approval? Will you be ready? And while we're in no way, you know, projecting that we will have an early approval, we wanna increase the confidence of our investors and the docs and patients out there could be recipients of this drug if and when approved, that we'll have the ability to start not just, you know, marketing this drug and selling it with ground troops, and and our tactics ready to to roll once we have a label, But and more importantly, that we'll be able to start shipping product. Too often, I think companies are caught with an approval date, that is far removed from their actual, quote, unquote, launch date or when they start shipping.

And while I will agree with your statement that what else would we have to do, well, probably not a whole heck of a lot to be prepared because we're preparing, you know, you know, almost a month ahead of what our potential action date is with the FDA. So the communication is meant to, be an internal battle cry to be prepared. If we end up, on our PDUFA date, know that we will be, even that much more, prepared. And it's the ticking and tying of tactics, people, and resource deployment, packaging, getting labels onto that packaging and being ready to ship. It's all those elements.

And to increase the confidence that we should be well ahead of, our PDUFA date to be prepared to do that.

Speaker 9

Okay. Great. Thanks, Peter. Then the final question for me, is related to some commentary earlier in the q and a about some of the key factors in competitive environments, especially when you've got, you know, a very large global pharma relative to, you know, small biotechs. And of course, one of the things that was mentioned really at the end of the day is the right drug, the best drug perhaps, especially when it comes to the actual data itself.

So wondering, in your discussions, what, do you find are the key points of differentiation, that appear to especially resonate with payers and and clinicians, especially relative to, you know, Benlysta and Gazyva? Thanks.

Speaker 2

You know, we I wouldn't say we put together a Chinese menu of, you know, restaurant menu of different options for physicians to to choose from in terms of, you know, what attributes do you like versus approved and unapproved drugs. We do ask questions, you know, to some degree to try to get an idea of what what, you know, attributes of our drug they see as being the most important. Starting with first what attributes they see as being the most important in the disease state in terms of controlling patients and keeping, patients out of, bad outcomes. And then we try obviously, go back and then apply how many of those apply to our drug. And I can tell you there's a there's a solid list there.

Max, I since you're closer to the day to day research and how we've been doing this, anything you wanna add as it pertains to Sure. Yeah.

Speaker 4

Competitive profile, etcetera? Yeah. So I would say that the with payers specifically, the efficacy of voclosporin resonates very strongly, also the the time to response. And I would say kind of a key metric that the payers focus in on is the number number needed to treat to get another additional response, which is about five with voclosporin, and that resonates strongly with payers.

Speaker 9

Great. That's helpful. Thanks, Max, and thanks, Peter.

Speaker 4

Appreciate it.

Speaker 2

Thanks, Ed.

Speaker 0

Thank you. There are no further questions at this time. I'll turn it back to management for closing remarks. Thank you.

Speaker 2

Well, thank you, operator. And on behalf of the company and our Board of Directors, I want to thank you all for joining us on the call today. We really and truly do hope you share our excitement about what's on the horizon this year for Aurinia. We wanna thank you all for your continued support, and we would like you to please have a great and safe evening. Thank you.

Speaker 0

Thank you. That concludes today's call.

Speaker 4

All

Speaker 0

parties may disconnect. Have a great evening.